Abstract: Innovation is the use of new knowledge to offer a new product / service that customers want. It is invention plus commercialisation. It is a new way of doing things. The process of innovation cannot be separated from a firm’s strategic and competitive context. It is a new knowledge which can be either technological or market related. Technological knowledge is knowledge of components, linkages between components, methods, processes and techniques that go into a product / service. Market knowledge is knowledge of distribution channels, product applications and customer expectations, preferences, needs and wants. The product / service is new in that its cost is lower, its attributes are improved and it now has new attributes it never had before. Often the new product / service itself is called an innovation, reflecting the fact that it is the creation of new technological or market knowledge. Innovation has been defined as the adoption of ideas that are new to the adopting organisation. Generating a good idea or adopting a new one in and of itself, is only a start. To be an innovation, an idea must be converted into a product / service. Coming up with the idea of prototype invention is one thing. Championing, shepherding and nurturing it into a product / service that customers want is another. Innovation entails both invention and commercialisation. Even though the face of innovation is often a product / service, innovation can find a place in virtually every department of an organisation. It is the life and blood of the organisation. The importance of innovation can be understood from the fact that the company that spearheads innovation is often considered the market leader. Schumpeter differentiated between the three types of creative activities -Invention, Innovation and Limitation - thus: • Invention is the act of creating or developing a new product or process. • Innovation is the process of creating a product / service from an invention. • Imitation is the adoption of an innovation by similar firms. Many companies are able to create ideas that lead to inventions but commercialising those inventions through in-novation has, at times, proved difficult. Firms in the developed west do not find it very difficult to be in the forefront of innovation and change. On the other hand, firms in the developing world find it exceedingly hard to compete on the technology plank. But here too, the companies which add some incremental value to the base product are able to succeed in staying ahead in the competition. It is no secret that the rate of diffusion of innovation has quickened over the decades. Consequently, firms are forced to change their outlook towards innovation and change. Earlier, the companies used to stick to a particular product, process or management strategy. But in the present day and time, the firms are always on the look out for a better product, cheaper process and more effective procedure. Peter Drucker aptly observed, “Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business. It is capable ofbeing presented as a discipline, capable of being learned and practised. Entrepreneurs need to search purposefully for the sources of innovation and their symptoms that indicate opportunities for successful innovation. Besides, they need to know and to apply the principles of successful innovation.” Today’s business experts have focused the definition of entrepreneur even more sharply. For a business to be considered entrepreneurial, it should exploit the changes in our world. These changes can be technological, like the explosion in computer technology that led Bill Gates’s starting the Microsoft; or cultural, like the impact of globalisation, which has led to all kinds of new business opportunities in Eastern Europe. So, an entrepreneur is someone who always searches for change, responds to it and exploits it as an opportunity.
Publication Year: 2007
Publication Date: 2007-06-01
Language: en
Type: article
Indexed In: ['crossref']
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